Common Investment Mistakes

Every novice investor will make avoidable, regrettable, costly mistakes and we aim here to help you avoid them.

I was investing as a young twenty-something in the heady days of the 80s, excited by the daily market growth reported in the 6pm news and morning paper, and scrambling to find as much coin as I could to join the market gold rush. I’d been introduced to investing by a flat mate who found a broker who was only too happy to take a commission on our frequent trades as the investment services we subscribed to excitedly recommended gems they had discovered.

Our error however was in jumping off the ledge with every other rooky in October 1987, selling at a considerable loss even taking into account our prior gains. These significant losses became, in time, tax deductions against future gains, but crystallising those losses was the dumbest thing I ever did. While the market did take about 8 years to sustainably recover, recover it did, but the people who made money were the people who bought when I sold!

Moral? Investing is a long term game. Always have some cash available and when the inevitable crash comes (and it will), be a buyer not a seller.
Moral 2? Don’t rely on a broker to care about you. The broker we used knew he was talking to two kids. He should have, as a minimum, counselled us to consider holding on. He didn’t. He took the sale, took the commission, and moved on.

Many times when buying or selling, I have sailed too close to the wind in bidding below the market price hoping to pick up on a dip when buying, or setting too high a sell price only to find the market is falling and the opportunity to take a good profit slips away.
It is better to get a sure transaction, even if you don’t maximise the trade, than to find that the market moves in the wrong direction and you have missed the cycle.